2) Longstaff (1995) obtains an upper bound on the marketability discount consistent with this range by modeling the value of marketability as the price of a lookback put option.

Section VI furnishes evidence that the marketability discounts predicted by the average-strike put option model are more consistent with empirical private placement discounts than those predicted by the lookback put option model after adjusting for ownership concentration, information, and overvaluation effects.

Longstaff (1995) models the marketability discount as a lookback put option whose value depends upon stock volatility and the time to expiration of the transfer restrictions.

Longstaff (1995) proposes a lookback put option model, and Finnerty (2012) proposes an average-strike put option model that can be used to quantify the loss of timing flexibility.

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